Dialogue at Aspen Institute Kyiv: “Reform of Public Service Wages in Ukraine. Ability for Victory, Reconstruction, European Integration”

On September 21st, the Aspen Institute Kyiv organized a Dialogue, “Reform of public service wages in Ukraine. Ability for Victory, Reconstruction, European Integration,” with the support of the EU4PAR project and the Reforms Delivery Office of the Cabinet of Ministers of Ukraine.Denis Poltavets, Director of Program Development at the Aspen Institute Kyiv, emphasized motivating public servants as a crucial component of the state service system’s capacity and efficiency.

The Dialogue aimed to explore models for the state service pay system that would contribute to strengthening the capacity of the state service amid the ambitious tasks facing Ukraine.

Participants believed that addressing state service capacity should encompass the entire civil service reform rather than focusing solely on the payment system. This holistic approach is critical given the competition for top professionals between the public and private sectors, further aggravated by staffing shortages.

Key directions outlined for enhancing capacity alongside the pay system included:

• Recognizing that state service pay is crucial but not the top priority since more is needed to boost the state service’s efficiency. The key is understanding the competencies required by public servants, identifying core functions, and eliminating unnecessary ones. Reforms in the state service must involve a reevaluation of its parts.
• Achieving institutional stability in positions is vital for development.
• Prioritizing the professional attributes of the civil service, such as expertise and integrity. High salaries should be based on the functions performed and align with HR policy consistency.
• Addressing wage disparities between the public and private sectors, including within central executive authorities.
• Reinstating competitive examinations for Category A positions in the civil service involving international partners.
• Addressing the dichotomy between fulfilling European integration requirements and the effective operation of the state service.
• Developing clear policies for civil service operations as the existing requirements are often fragmented and need a comprehensive policy framework.
• The present offers an opportunity for reform. The issue of civil service reform implies rethinking the social contract.

Participants stressed that civil service attractiveness is essential, and its prestige needs to be elevated. Regarding this topic, participants made the following points:

• Qualified professionals are reluctant to join the civil service due to high reputational risks and lower salaries than the private sector. Achieving relevant salary levels is essential for constructing an effective state service.
• According to international research, paying for performance does not motivate public servants. However, civil servants often focus on comparative fairness.
• Qualified professionals demand a more efficient civil service that avoids unnecessary functions, offers clear and understandable KPIs, and can deliver optimized public service. Optimizing the civil service can lead to savings that can be used to increase the salaries of remaining civil servants.
• Encouraging efficient top managers and continuous engagement with public authorities’ leaders can be a crucial change for establishing an efficient civil service system.

The participants of the Dialogue concurred that the primary goal for the next 3-5 years is to avoid a shortage of personnel, harmonize Ukrainian legislation with EU laws, and implement measures for Ukraine’s reconstruction.

Participants named the following steps to achieve these goals:

• Optimize the functions of state authorities and assess their efficiency.
• Understand the competencies required for public servants and how motivation systems should be structured.
• Introduce a new pay system that eliminates wage disparities within central executive authorities.
• Develop a human capital strategy to determine the desired capacity and the blend of competencies for civil servants, understand which competencies can be developed among existing civil servants, perspectives of active personnel recruitment, and which tasks can be outsourced.

Yegor Hryhorenko, a member of the Supervisory Board of the Kyiv School of Economics, Partner, and Head of the Consulting and Risk Management Departments at Deloitte Ukraine, moderated the Dialogue.

Thanks to the EU4PAR project and the Reforms Delivery Office of the Cabinet of Ministers of Ukraine for their support in organizing the event.